Tuesday, April 8, 2008

Imaginary Rice

I asked a friend in Manila what he was doing nowadays and he replied that he wasn’t doing much, just waiting for GMA (Pres. Gloria Macapagal-Arroyo) to fall. I asked him if he was at all concerned about the rice crisis we had been hearing so much about. He said that he thought it was just a ploy used by GMA to divert attention from the many scandals facing her government.

The irony is that GMA just announced that there is no rice shortage in the country and that talk about such a shortage is “imaginary”.

The reality is that talk about the crisis has pushed the Philippine Senate hearings on government corruption out of the front pages of Manila’s dailies which are now filled with stories about the “imaginary” crisis.

The other reality is that there is a real rice crisis that has been brought about by external and internal factors within and without the control of the government. The world-wide skyrocketing of food and fuel costs has been exacerbated by the government’s actions and inactions.

In 2003, the world price of rice was $200 per metric ton. Four years later, in 2007, it jumped to $300. In less than a year since then, the price has doubled to $600 per metric ton, and it is expected to rise to as much as $1,000 per metric ton within a year.

The Philippines consumes approximately 18-M metric tons of rice a year to feed its growing 90-M population. But the country only produces about 90% of the rice it needs requiring it to import about 1.8-M metric tons, making it the world’s largest importer of rice.

Less than a month ago, the Philippines signed an agreement with Vietnam to purchase 1.5-M metric tons of rice for the year. But the agreement has an escape clause that would allow Vietnam to back off from the deal in “circumstances of natural disaster and harvest loss.” One major storm in Vietnam could easily precipitate a major rice crisis in the Philippines.

According to Sen. Mar Roxas, president of the Liberal Party, the Philippines is facing a metaphorical “perfect storm" with the steep rise in the price of rice being compounded by skyrocketing fuel costs (oil at $110 a barrel) and a recession in the US economy. The latter is certain to dramatically reduce the remittances of overseas Filipinos which the country has relied on to stabilize the economy.

To avert the impending rice shortage, the Philippine government has asked fast food chains like Jolibee and MacDonald’s to lessen the rice served with their meals in order to conserve.

One serious solution is to improve the country’s post-harvest facilities. According to Rep. Abraham Mitra, “post-harvest losses in rice hovers around 14 to 25 percent.” If the country invested in more modern post-harvest facilities, there would be no need to import rice. At a cost of $600 per metric ton of rice for a total of 1.8 million metric tons, which the Philippines will be purchasing in the open market, the government will spend about $1 billion (P40 billion pesos), more than 100 times the Philippines annual post-harvest budget.

An official of the Philippine Department of Agriculture told the Manila Times that the country spends only 1,000 pesos per farmer, which is low compared to the equivalent of 3,000 to 4,000 pesos per farmer spent by countries like Thailand, Japan and other developed countries.

Former President Fidel Ramos blamed part of the problem on the conversion of farmlands into subdivisions and industrial zones. He said the government should change its land-use policy and prohibit the conversion of arable lands to commercial and industrial use.

But even where the land remains agricultural, much of the rice land has been converted into banana plantations, notably in Mindanao, because the price for banana exports is higher than the price of rice on the domestic market.

The Comprehensive Agricultural Reform Program (CARP) has also caused problems as millions of hectares of land have been divided up into small parcels of land where farmers can’t afford to buy and use tractors and machineries to improve production because of the economies of scale so they use carabaos instead, producing the average current yield of 2.5 tons of rice per hectare, the lowest in Asia.

Of the 8.5 million hectares of arable land in the Philippines, about 6.5 million hectares have been distributed under CARP to 4 million farmer-beneficiaries, about half of the area devoted to rice and corn. More than 3 million of the farmer beneficiaries have not received the support services and access to the credit they were promised and which they need to maximize the production of their land. The government spent 157 billion pesos to purchase the lands but has precious little to help the farmers once they own the land.

Former Pres. Ramos pointed out another problem exacerbating the rice crisis - too many mouths to feed. “The population issues, of course,” he said, “must also be revisited because the government has prohibited artificial family planning methods to be supported by the budget and therefore this is a very big withdrawal of support to the poorest families especially those in the countryside.”

As a concession to the powerful Catholic Church, the Arroyo government has refused to accept millions of dollars in aid from the United Nations and the USAID in support for population and family planning programs. Ramos denounced the rejection of UN family planning assistance “because we are going contrary to what is being practiced in the most Catholic countries in the world, like Italy, Spain, Portugal, France, Austria, Ireland, which is enjoying a population growth rate of less than one percent,” he said.

Ramos said the country’s birthrate is three times of those countries mentioned, “so that this infringes on all of these new problems that we are now encountering including rice, and potable water.”